Synthetic Positions

I have a fundamental question about Synthetic Position questions;

I don’t think I understand how the whole thing works.

Can anyone explain?


Synthetic means gain exposure using derivatives (like futures), not cash instruments (like stocks.)

OTOH a synthetic call is a put + stock - bond.

thanks for replying 1recho, though I understand the logic of it. however, I don’t know how this will be tested.

Any one have examples?

You could be asked how you can convert an existing treasury position to equity, or vice versa. Or, how to adjust the portfolio beta or duration. You will need to calculate the # of futures to hedge with or leverage.